India’s manufacturing sector has moved into a cautious “wait-and-watch” mode as the escalating war involving Iran threatens to disrupt critical shipping routes and energy supplies linked to the Gulf region. Automakers, electronics manufacturers and consumer goods exporters are urgently assessing their exposure to supply chains that pass through the volatile corridor.
Industry executives say the conflict has already begun affecting trade flows, with exporters reporting shipment delays, halted consignments and rising logistics costs. War-risk surcharges imposed by shipping companies have sharply increased freight expenses, wiping out margins for several export-oriented manufacturers.
Automobile and two-wheeler makers have issued advisories to their supplier networks, asking vendors to map dependencies on raw materials and components routed through Gulf ports. Key inputs under scrutiny include aluminium alloys, copper, petrochemical derivatives, PVC resins, lubricants, adhesives and electronic components.
Major automakers including Tata Motors, Mahindra & Mahindra, Maruti Suzuki, Hero MotoCorp, Hyundai Motor India and Toyota Kirloskar Motor have not commented publicly on the situation. However, Kia India said it is “closely monitoring the evolving geopolitical situation” and remains in constant communication with its suppliers.
Some manufacturers have already activated crisis management teams similar to the supply-chain “war rooms” set up during the COVID-19 pandemic. Suppliers in major auto hubs such as Pune report an unusually high volume of calls from automakers seeking clarity on supply vulnerabilities.
“We are getting hundreds of calls every day,” said a Pune-based supplier serving Mahindra, Skoda Auto Volkswagen India and Tata Motors. “They are not panicking yet, but they want to be fully prepared if the situation worsens.”
Energy supply disruptions are also adding to the pressure on manufacturers. City gas distributor Adani Total Gas has asked commercial and industrial customers to reduce natural gas consumption to 40 per cent of their contracted volumes, warning that usage beyond this limit would be billed at much higher spot market rates.
Similarly, Gujarat Gas has invoked force majeure on certain gas supply agreements following a sharp tightening of regasified LNG availability. In another blow to industry, Indian Oil Corporation has halted propane supply, a move that could severely impact sectors such as ceramics where 70–80 per cent of manufacturers depend on propane as a key fuel.
The energy squeeze is affecting not only vehicle manufacturers but also ancillary industries such as foundries, forging units and paint shops. Switching from gas to alternative fuels like oil often requires additional capital expenditure, regulatory approvals and technical adjustments—factors that smaller suppliers struggle to manage quickly.
In a letter dated March 9 to the Ministry of Heavy Industries, the Automotive Component Manufacturers Association of India, which represents more than 1,100 component manufacturers, requested at least one month of continued gas supply to enable an orderly transition. The association also sought export credit support and additional working capital assistance for affected firms.
The crisis is also rippling through consumer goods and electronics manufacturing. Several exporters have begun scaling back production linked to overseas orders after suspending shipments to Gulf markets.
At AWL Agri Business, executive deputy chairman Angshu Mallick said exports had to be halted because war-risk surcharges would eliminate profit margins. Electronics contract manufacturers have taken similar steps, with export-focused production lines temporarily shut.
Ajay DD Singhania, chief executive of Epack Durable, said production lines manufacturing air conditioners for West Asian markets have been paused. Companies such as Godrej Appliances and Haier Appliances India have also adjusted production schedules in response to the disruption.
Fast-moving consumer goods companies including Parle Products, Emami and Marico, which maintain significant operations in Gulf markets, are also assessing the potential impact.
With factories heavily reliant on raw material flows, energy supplies and shipping lanes that pass through geopolitically sensitive regions, industry leaders say the coming weeks will be critical in determining whether the situation stabilises or triggers wider manufacturing disruptions across India.
